The Nemenoff Report 08/22/19

Financials: Sept. Bonds are currently 26 points lower at 164’00, 10 Yr. Notes 9 lower at 130’08.0 and the 5 Yr. Note ’05.5 lower at 119’01.0. The long Dec.19/short Dec.20 Eurodollar spread is currently 2 points our way at 47.5 premium the Dec.20 contract. Yesterday’s release of the FMOC minutes showed 2 dissenting votes for the rate cut. Other than that, pretty much the same old same old. Concerns about the trade war, possible global slowdown, employment figures and of course the well-worn statement that decisions are “data dependent. MY guess is that there will be one more rate cut this year and maybe one in Q1 2020. Once again, the yield spread between the 2 year and 10 year notes inverted by a few ticks momentarily, which could portend a recession according to many economists. There is an old saying among economists “Economists have predicted 11 out of the last 7 recessions”. All that being said I continue to hold the aforementioned Euro dollar spread and will take the loss should the spread start trading above 52 points premium the Dec. 2020. As a trading vehicle I will trade the 5 Yr. Note between 118’22 and 119’18. The 30 Yr. Bond still looks technically poised to go higher in the long-term.

Grains: Dec. Corn is currently 1’4 higher at 371’6, Nov. Beans 2’ higher at 875”4 and Dec. Wheat 0’2 lower at 467’6. Government Reports have been at odds with trader estimates of crop size with gov’t estimates much higher than that of the trade. Add technical indicators to the mix and we have been in a Bear market. I feel there is more damage and yield erosion than these Reports show. I recommend to start trading from the long side on breaks. You might also consider going long near the money call options.

Cattle: Live and Feeder Cattle declined sharply after the news broke re. the Tyson plant in Kansas which accounted for 6-7% of all cattle slaughtered. WE saw prices decline to the 98.00 level in Oct. LC and a 7.00+ break in Feeders. I think this break is a buying opportunity around 98.00 in Oct.LC for a rally to the 103.00-105.00 area.

Silver: Sept. Silver is currently 15 cents lower at17.00. I remain long and still feel there is room to go higher. Lower rates will help this market. Roll into Dec. contracts next week.

S&P’s: Sept S&P’s are currently 3.75 higher at 2933.00. This market has been highly volatile staying in a range of 2630.00 and 2840.00 Treat as a trading affair. I am a seller just above the market with a buy stop at 2946.5

Currencies: I am still on the sidelines but feel that a no Brexit deal will push the Euro and Pound lower.

Regards,
Marc